Focus on Pfizer

"We should see the lows for the year sometime between now
and the November election," says John Mugarian, editor of

Investor Alert. "We want to take
advantage of these pre-election jitters and buy the largest and best drug
company in the world."

"Pfizer (PFE NYSE) is the best in the business. Before the
1998 Viagra launch, Pfizer’s stock price hovered around $32 per share (on
a split-adjusted basis), and promptly soared to over $50 in a little less than
6 months. As the stock price took off, the company’s P/E ratio reached an
astronomical level of 61. Today, the stock price is trading below $35, with a P/E
of 13, which is a level not seen since 1994. After Viagra’s debut, the company went
on a buying binge, picking up blue-chip darlings like Warner-Lambert in June of
2000, and Pharmacia in April 2003. Pfizer has 11% of the global pharmaceutical
market, and has taken the top spot as the world’s largest prescription drug
company.

"In 2003, the company’s earnings came in
at $1.74 per share, more than double what the company had reported in 1999.
During the same period, the company raised its dividend from 31 cents a share to
61 cents. With the addition of Pharmacia, Pfizer now expects sales to climb 18%,
and earnings for 2004 and 2005 to come in at $2.13 and $2.38, respectively.
Pfizer has a pirate’s chest full of blockbuster drugs, including Lipitor (the
world’s best-selling cholesterol drug), Norvasc (cardiovascular), Zoloft
(antidepressant), and Celebrex and Bextra for arthritis. Fourteen of Pfizer’s
drugs are leaders in their respective markets, and eight are among the world’s
top-selling brands. In addition, the company has many popular over-the-counter
products, such as Benadryl, Sudafed, Visine, and Rolaids.

"Pfizer’s diverse product line reduces the
risk of being reliant on any one drug or patent. Investors have been very
hesitant to buy pharmaceuticals before the November elections. But
regardless of what happens politically, I don’t think we’ll see a repeat of
the health care debacle of the early 1990s. If, in fact, we do one day get
universal health care for every American, the drug companies will gain millions
of new customers who were not previously covered by health insurance and simply
went without medications. The stock has gone virtually nowhere since sp litting 3-for-1
in 1999, yet earnings have more than doubled. The company sports a pristine
balance sheet and is trading at a P/E ratio of just 13. The company’s P/E has not
been this low in 10 years. The stock is a conservative buy Pfizer at $35 or
less."